Negotiating cell tower leases is difficult when both you and your attorney don’t speak telecom legalese. How can you be certain the cell tower lease rate you are negotiating for is fair market value? Although your attorney may have helped you to close real estate deals, handled litigation or other complex transactions in the past, and may even be a good friend, chances are that in 99% of all cell tower deals, they don’t too much about cell tower leasing, or how to deal with the carriers.
Picture the following cell tower leasing scenario. Imagine that the cellular carriers and their attorneys are a pack of hungry lions. Landlords and your attorney are a young animal separated from the herd. Without proper protection, you don’t stand a chance. Wireless carriers and their attorneys will impose their terms on you especially if you or your attorney don’t speak telecom legalese. By the time you realize what’s going on, it’s too late; you’ve either agreed to terms in your cell tower lease that you are unhappy with, your attorney has negotiated you out of the deal, or they have moved onto another site. Either way, you’re dead.
Here is the inside scoop about cellular tower lease rates that cellular phone carriers don’t want landlords to know about. Wireless carriers pay their real estate site acquisition leasing contractors high commissions for executing cell tower leases at certain price points. The better the terms agreed to in favor of the carrier, the higher the bonus is that’s paid to the leasing agent. Now, there is nothing wrong with this as we live in a free market society, but if you own a property and a carrier wants to lease space from you for a tower or for rooftop cell site, you want to make sure that you are maximizing your revenues.
Cell Site Leasing Misconceptions:
Often times landlords and property owners look to a cell site expert to provide them with comparative lease rates being paid by cellular carriers nearby in order to determine what they should be getting as fair market value.
Similarly, cellular carriers regularly push back during lease negotiations saying that no landlords are receiving what you are asking for.
Here’s the 411. Your neighboring landlords with existing cell tower leases all could have negotiated horrible rates and terms, and the cellular carriers can literally be ripping off and low balling landlords and putting up cell towers wherever they can find a landlord willing to take a dirt cheap rental rate, and is not reflective of fair market value.
All of the research and fair market value data on lease rates is completely worthless if you don’t know how the cell tower lease negotiation game is played.
Think about this…
At a lease rate of $2K monthly or $24K yearly rental, if you agree to 2% yearly rental increases instead of a 3% yearly increases, you will receive $132,000 LESS over the 25 year term of the cell phone tower lease. Now let’s say you have a 4 or 5 carrier monopole cell tower and all of your leases are at 2% instead of 3%. Now we are talking about upwards of a half-million dollars in lost revenue over the terms of the lease agreements. OUCH!!
Now here’s the minor detail that will either cause you to laugh or cry about cellular antenna lease rates. The cell site acquisition subcontractor we told you about a few paragraphs ago, they might make a bonus of $500 to $2,500 for saving the carrier that $132,000 they were going to pay you if you would have agreed to the better terms.
Are you negotiating cell tower lease rates on a level playing field with the cellular carriers?